Financial Results of FY2021 Q2
Presentation Material

November 26, 2021

This document contains forward-looking statements that reflect the Company’s judgments based on
various assumptions. The Company makes no guarantees or promises regarding the certainty,
completeness, or implementation status of such statements.
1

Introduction

Greetings fromPresident & Representative Director
Minoru Nakatogawa.

2

Contents

1. Financial Results for the FY2021 Q2 (Consolidated)
2. Financial Forecasts for the FY2021 (Consolidated)

3. Implemental Measures to Strengthening of the Group’s
Business Structure
Ref. Medium-term Business Policy 2022（Supplementary Material）

3

1. Financial Results for the FY2021 Q2 (Consolidated)【Financial Results】
End of Sep.
2020

Million
Ne t sa le s
Y e n
O p e r a t i n g Million
I n c o m e Y e n
O p e ra t in g%
m a r g i n
O r d i n a r y Million
I n c o m e Y e n
Profit attributable to Million
owners of parent Y e n

End of Sep.
2021

End of Mar.
2021

Difference- Net sales, operating income & ordinary income

75,19997,80422,605

159,702

1,481

3,483

2,001

5,592

were increased.
- Due to recorded gain on sales of investment
securities at extraordinary income by 4,071

2.0%

3.6%

1.6%

3.5%

2,168

4,089

1,920

6,773

4,869

2,311

-2,558

7,468

million yen in the previous year, profit
attributable to owners of parent was decreased.

140,000【Financial Conditions】

120,000

End of Mar.
2021
Total assets
Net

assetsCapital adequacy
R a t i oMillionY e nMillionY e n%

20,000Net sales (Million yen)
Operating income (Million yen)

End of Sep.
2021

97,804

100,000

Difference

15,00082,54275,19980,000218,275

217,802-472

94,364

94,323

-40

42.0

42.1

0.0

10,00060,00040,000

4359

5,000

3483
1481

20,00000

End of Sep.
2019

End of Sep.
2020

End of Sep.
2021

4

Financial Results by Segment (Consolidated)(Unit：Million yen)

Net Sales

FY2020Q2

FY2021
Q2

Difference

FY2020 Q2

32,983
7,642
11,65913,68140,75635,249
2,476
3,030
1,043

38,6508,632
15,412
14,60657,75650,335
3,584
3,836
1,036

5,667
989
3,753
925
17,00015,085
1,108
806
-6

Other

415

360

-54

Total

75,19997,80422,605

MachineryI n d u s t r i a l
R o c k D r i l lUNICMaterials
M e t a l s
Electronics
C h e m i c a l s
Real Estate

Operating
IncomeFY2020Q2

LME CopperP r i c e

5,931$/ton

9,541$/ton

3,610$/ton

JPY rate perUS$

106.9yen/＄

109.8yen/＄

2.9yen/＄Backlog of orders in the Industrial Machinery Segment
End of Sep. 2020

End of Sep. 2021

9.4 Billion

9.1 Billion

Backlog of orders

Difference-0.3 Billion- Constructing a new bridge of Yamashiro Sports Park Joyo Line (Kyoto Prefecture)

metropolitan area tunnel(Kitashinagawa Industrial Zone).

Difference- Sealed hanging conveyor (SICON®) for the construction of the Shin-Kobotoke tunnel on

1,636

2,093

456

I n d u s t r i a l
R o c k D r i l lUNICMaterials
M e t a l s
Electronics
C h e m i c a l s
Real Estate
Other

519
-512
1,629
-443
-458
-105
120
364
-55

337
404
1,351
1,091
452
228
410
361
-30

-181
916
-278
1,534
911
334
289
-2
25

-20

-32

-12

1,481

3,483

2,001

Total

Difference- Sealed hanging conveyor (SICON® ) for the construction of the Chuo Shinkansen 1st

FY2021
Q2

Machinery

Adjustment

FY2021 Q2

the chuo Expressway.

Etc.

Impact of metal price fluctuations on operating profit in the Metals segment

FY2020 Q2

FY2021 Q2

Difference

Operating income¥-450 million¥450 million¥910 million

Include price effects¥210 million¥740 million¥520 million

Copper(¥-120 million)(¥620 million)(¥740 million)Gold(¥290 million)(¥80 million)(¥-210 million)

52

Increase/Decrease in Earnings by Segment (Consolidated)
Net Sales(Increased tunnel drill jumbos, hydrauliccrushers, hydraulic crawler drills, etc.)(Volume¥-1.8billion, unit cost¥+15.9billion)

Overseas +3.1billion(Volume¥+0.3billion, unit cost¥+0.1billion),(Significant increase in shipments ofhydraulic crawler drills and hydraulicbreakers in north America.)

etc.

Gold ¥+0.4billion

FY2020 2Q Results

FY2020 2Q Results(Shipments of UNIC cranes increased for China,
shipments of mini- crawler cranes decreased for North America.)-0.1billion

decreased due toLower sales of partsfor material machineryand an increase in
SG&A expenses.

Chemicals

Overseas +0.4billion

1-0.2billion

Electronics(Increased due to a recovery in the willingness to invest amongwide-area rental companies and industrial sales companies.）+0.3billion

UNIC

Domestic +0.4billion

Rock Drill

Increased high-purity metallic
arsenic, crystal products,
coils, aluminum nitride2+0.2billion+0.9billion+0.9billion

Industrial

Increased
cupric oxide
and cuprous
oxide

Real Estate, Other

Chemicals

50+3.7billion

UNIC

60

Industrial

70+15.0billion+0.9billion

Metals

+0.9billion

Electronics

80

Rock Drill90

3-0.0billion

Exchange rate 109.8(¥/$)(YoY +2.9）+0.0billion

Increased due to increasein sales.
(Loss in previous year)+0.8billion+1.1billion
increased due tosales corresponding
to volume in material
machinery and belt
conveyor projects

Profit due to price gains from higher
Billion overseas market price, improvement ofyenpurchasing conditions.

Real Estate, Other

Copper ¥+14.1billion¥3.4billion¥+2.0billion(up 135.1%)

Metals100¥1.4billion
4

Domestic +0.5billion

FY2021 2Q Results

110
Billionyen¥97.8billion¥+22.6billion(up 30.1%)

Increased due toIncrease in sales.

Increased due to increasein sales.
(Loss in previous year)
Increased sales for wide-area rental
companies and industrial sales
company, but cost price rate turned
worse.
Decreased due to decrease in sales ofmini-crawler cranes.
Decreased due to freight rates soared
due to a shortage of containers.

0
Although profit decreased in the Industrial Machinery and UNIC, recorded profit in the Rock Drill , Metals andElectronics (Loss in previous year.), increased in the Chemicals.
Compared to the forecast announced in May, operating income increased ¥0.9 billion from ¥2.5 billion.

FY2021 2Q Results¥75.1billion

Operating Income

6Consolidated Income Statement(Unit: Million yen)

FY2020Q2

FY2021
Q2

Difference

Net sales

75,19997,80422,605

Cost of sales
Selling, general and administrative expenses

65,282
9,916
8,434

85,162
12,642
9,158

19,8792,726
724

Operating income

1,481

3,483

2,001

Non-operating income

1,458

1,668

210

Dividend income

489

451

-38

Gain on sales of goods

32

411

378

Other

936

805

-130

771

1,063

291

234

217

-17

Control cost of Suspended mines

372

432

60

Other

163

412

249

Ordinary income

2,168

4,089

1,920

Extraordinary income

4,090

107

-3,982Gain on sales of non-current assets

18

28

10

Gain on sales of investment securities

4,071

45

-4,026

－
166

33

33

725

559

Loss on revaluation of investment securities

－

176

176

Demolition cost of leasing building

－
166

466

466

82

-83

Profit before income taxes

6,093

3,470

-2,622

Income taxes

1,034

996

-38

81

35

-46

4,976

2,439

-2,537

107

128

21

4,869

2,311

-2,558(Gross profit)

Non-operating expenses
Interest expenses

Government subsidy income
Extraordinary losses

Other

Income taxes adjustment
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

Gain on sales of manufacture equipmentof scintillator crystal, etc.

Decreased equity in earnings of affiliates,
etc.

Recorded head office transfer expenses,
foreign exchange losses

Sold investment securities for effective
use of assets and restoration financial
health in the previous year.

The cost of demolition work progress ofthe Furukawa Osaka Building.

7

Consolidated Balance Sheet(Unit: Million yen)
End of Mar.
2021

End of Sep.
2021

Difference

AssetsDecreased cash and cash equivalent, etc..

Current assets

88,62586,785-1,839Non-current assets

129,649

131,016

1,367

89,817

90,941

1,123

341

366

24

39,49039,709218

218,275

217,802-472

Property, plant and equipment
Intangible assets
Investments and other assets
Total assets

Increased buildings & structures, land, etc.

Transfer of current portion of long-termloans payable, etc.

Liabilities

Current liabilities

47,83952,132

4,293

Non-current liabilities

76,071

71,346-4,725

123,910

123,478-432

Total liabilities■Interest-bearing debt

Net assets(Unit: Million yen)

End of Mar.
2021

End of Sep.
2021

Difference

Shareholders’ equity

76,37376,739366

Capital stock

28,20828,208－

Short-term

8,436

9,727

1,291

2

2

－

Long-term

61,24659,979-1,266

Retained earnings

50,02550,392366

Total

69,68369,707

24

Treasury stock
Total accumulated othercomprehensive income
Non-controlling interests-1,862-1,862-0

15,396

14,859

-537

2,594

2,724

130

Total net assets

94,364

94,323-40

Total liabilities and net assets

218,275

217,802-472

Capital surplus

8

2. Financial Forecasts for the FY2021 (Consolidated)【Financial Forecasts】
FY2020(Unit: Million yen)

(Unit: Million yen)
FY2021(Forecasts)

FY2020Net sales

Difference

Machinerys a l e s

159,702

196,900

37,197

Operating income

5,592

7,500

1,907

Ordinary income

6,773

7,700

926

Profit attributable to
Owners of parent

7,468

5,000

-2,468N e t

I n d u s t r i a l
R o c kD r i l l

U

I

N

C

Materials
M

e

t

a

l

s

Electronics
C h e m i c a l s

Annual dividend

50 yen50 yen-Real estate
Other
Total

- Net sales, operating income & ordinary income were increased.

68,635
16,682
24,14927,80488,20376,094
5,741
6,367
2,107
755
159,702- Due to recorded gain on sales of investment securities at extraordinary income
by 4,071 million yen in the previous year, profit attributable to owners of parent was
decreased.

FY2020Operating income

Difference

LME Copper Price

6,879$/Ton

9,271$/Ton

2,392$/Ton

JPY rate per US$

106.1yen/＄110.9yen/＄

4.8yen/＄Operating income increase annually about ¥100 million due to ¥1 week to US dollar.
- Increase about ¥60 million in Machinery business (mainly Rock Drill)- Increase about ¥40 million in Metals segment

Difference

1,631

Adjustment

2,113-1,324
3,180
1,040
499
161
380
736
-82
-71

1,600
1,000
3,000
1,450
450
350
650
650
-130
-70

-513
2,324
-180
409
-49
188
269
-86
-47
1

Total

5,592

7,500

1,907

R o c kD r i l l

U

I

N

C

Materials
M

e

t

a

l

s

Electronics
C h e m i c a l s

Regard to exchange rate sensitivity

9,764
2,017
6,050
1,695
26,49624,305
1,258
932
-7
944
37,1975,600

I n d u s t r i a l

FY2021(Forecasts)

FY2021(Forecasts)

Difference

3,968

Machinery- ROE forecast fell 3.6 points, to 5.3% (8.9% in the previous year).

FY2020

FY2021(Forecasts)
78,40018,70030,20029,500114,700
100,400
7,000
7,300
2,100
1,700
196,900

Real estate
Other

9

Increase/Decrease in Earnings Forecasts by Segment FY2021 / vs Previous YearNet Sales(Volume-1.9billion, Unit price+23.6billion)(Increase due to sales of
Yamaishi Metal Co., Ltd. throughmargers and acquisitions.

Gold +2.1billion

Domestic +0.4billion
Overseas +5.6billion

40-0.0billion-0.5billion+2.3billion

Chemicals(Increase demand for rental andindustrial companies in Japan.
Increase in overseas, mainly in China.

-0.1billion+0.1billion

Electronics

Domestic +0.9billion
Overseas +0.8billion

2

UNIC

Increase demand forcrystal products,
aluminum nitride, etc.

-0.1billion

Exchange rate 110.9(¥/$)(YoY +4.8)+0.2billion

Rock Drill

FY2020 Results

Increase due tohigher copper pricefor cupric oxide andcuprous oxide.

Record profit due toincrease in sales(Loss in Previous year.)¥7.5billion

Increase due toincrease in sales.

Real Estate, Other

6

Same level as the previous fiscal year,
mainly due to price gains from higher
overseas market prices in the first halfof the fiscal year.

Industrial

130

Increase for bridges,
large-scale projects,
and material machinery.

Real Estate, Other

140+6.1billion+2.0billion

8+0.9billion

Chemicals

150+1.6billion

Metals160

UNIC

Industrial

170

Rock Drill

180+0.9billion+1.2billion(Increase in overseas,
mainly in North America)

Billionyen

Metals(Volume+1.9billion, Unit price+0.2billion), etc.
+24.3billion

Electronics

190

Other +0.9billion+1.9billion(up 34.1%)

Decrease due to the impact ofhigher steel prices and soaring
freight rates caused by container
shortages.

decrease due to the contributionof highly profitable bridge
projects in the previous fiscal
year and lower sales of parts inmaterial machinery.

Real Estate
Rent was reduce or
exempt for somecommercial tenants.

FY2021 Forecast

200¥5.6billion
10

Copper +21.7billion

FY2021 Forecast

210
Billionyen¥196.9billion¥+37.1billion(up 23.3%)

FY2020 Results¥159.7billion

Operating income

Although profit decrease in the Industrial Machinery, Profit increase due to UNIC and Real Estate, record profit
in the Rock Drill (Loss in previous year), Increase in the Electronics and Chemicals.
10Revised transition of Financial Forecasts for the FY2021 (Consolidated)〔Net Sales〕
Machinery
Industrial
Rock Drill
UNIC
Materials
MetalsElectronics
Chemicals
Real Estate
Other
Total

(Unit: Million yen)Disclosed
May 13, 2021
76,10018,70028,30029,100105,500
92,700
6,400
6,400
2,100
700
184,400

Disclosed
Nov. 11, 2021
78,40018,70030,20029,500114,700
100,400
7,000
7,300
2,100
1,700
196,900

Disclosed
May 13, 2021
6,300
2,200
750
3,350
-100
-700
200
400
650
-180
-70
6,600

Disclosed
Nov. 11, 2021
5,600
1,600
1,000
3,000
1,450
450
350
650
650
-130
-70
7,500

〔Operating Income〕
Machinery
Industrial
Rock Drill
UNIC
Materials
MetalsElectronics
Chemicals
Real Estate
Other
Adjustment
Total

Difference

2,300
0
1,900
400
9,200
7,700
600
900
0
1,000
12,500Precondition (Annual forecast)
Disclosed
May 13, 2021

Disclosed
Nov. 11, 2021

Difference

LME Copper Price

8,000 $/Ton

9,271 $/Ton

1,271 $/Ton

JPY rate per US$

108.0 yen/$↓110.9 yen/$

2.9 yen/$3Q, 4Q forecasts
LME Copper price 9,000$/Ton
JPY rate per US$ 112 yen/$(Unit: Million yen)

Difference

-700
-600
250
-350
1,550
1,150
150
250
0
50
0
900

Increase/decrease in operating income forecastof Metals (vs Previous forecasts)

Previous forecast (Disclosed May 13)
Operating income ¥-0.7billion
Current forecast (Disclosed Nov. 11)
Operating income ¥+0.45billion
Breakdown of ¥+1.15billion
Consignment margin¥+0.4billion→Decreased smelting consignment expenses
due to decreased copper volume.
Increased due to change precondition of
LME copper price & JPY rate per US$.
Price margin ¥＋0.8billion-> Reflected price margin in 1 half.

11Increase/Decrease in Earnings Forecasts by Segment FY2021 / vs Previous Forecasts

Operating income

Other +1billion(Volume-2.5billion, Unit price+13billion)(Increase due to sales of
Yamaishi Metal Co., Ltd. throughmargers and acquisitions.

Gold -2.9billion

210

Increase demand forcrystal products,
aluminum nitride, etc.
+7.7billion(Disclosed May 13)

Previous Forecasts

4+0.15billion+1.15billion-0.35billion+0.25billion+0.25billion

Decrease due to the impact ofhigher steel prices and soaring
freight rates caused by container
shortages.

Real Estate, Other

5

Increase due toincrease in sales.

Chemicals

6

Exchange rate 110.9(¥/$)(vs previous forecasts +2.9)
3Q, 4Q 112.0(¥/$)(vs previous forecasts +4.0)

Electronics(Increase in sales due to increasedemand for rental and industrial
companies in Japan.

-0.6billion

UNIC

Domestic +0.7billion
Overseas -0.3billion

7

Industrial

Increase due tohigher copper pricefor cupric oxide andcuprous oxide.

+1.0billion

Real Estate, Other

Chemicals

Metals

150

UNIC

160

Rock Drill

170

Industrial

180

Electronics+1.9billion+0.4billion

Increase due toincrease in sales.

+0.9billion+0.6billion

190

8Increase due to price gains from higher
overseas market price in the first half ofthe fiscal year, improvement ofpurchasing conditions.
(Details on page 11)

Rock Drill(Although decrease in domestic,
increase in overseas, mainly inNorth America.)¥7.5billion¥+0.9billion(up 13.6%)

Metals200

9(Volume-2.6billion, Unit price-0.3billion), etc.

Domestic -0.6billion
Overseas +2.5billion

Billionyen(Disclosed May 13)

Billionyen¥6.6billion
10

Copper +10.5billion

Current Forecasts

220¥196.9billion¥+12.5billion(up 67.8%)

Previous Forecasts¥184.4billion

Increase due toincrease in sales.

decrease due to lower sales ofparts for material machinery.

Current Forecasts

Net Sales

3

Although decrease in the Industrial Machinery and UNIC, net sales and profit increase due toIncrease in the Rock Drill , Metals, Electronics and Chemicals.
12State of Capital Investment, Depreciation and Amortization, Research andDevelopment Expenses (Consolidated)【State of Capital Investment (Consolidated)】
Capital Investment

FY2019FY2020(Annual)(2Q)(Unit: Million yen)

FY2021(2Q)(Annual forecasts)

4,123

2,637

3,800

Industrial

404

1,253

2,600

Rock Drill

2,782

437

300

UNIC

936

946

900

Material

1,229

827

800

Other

585

679

1,400

Total

5,938

Machinery

1,295

4,144

3,072

Increased due to construction of anew office building at Oyama Works.

6,000【State of Depreciation and Amortization (Consolidated)】
Depreciation andamortization

3,589

1,888

3,879

1,931

4,000

【State of Research and Development Expenses (Consolidated)】
Research andDevelopment Expenses

1,177

632

1,164

738

1,400
13

State of Metal Products, Foreign Exchange Rate, Employees (Consolidated)【State of Metal Products, Foreign Exchange Rate (Consolidated)】
FY2020FY2019(2Q)

Overseas market
price of copper(Average)

FY2021(Annual)(2Q)(3Q,4Q Forecasts)€/pound

265.8

269.0

312.0

432.8

408.2

$/ton

5,860

5,931

6,879

9,541

9,000

JPY rate per US$ (Average)

108.74106.92106.06109.80112.00

Production and marketing of
Furukawa Metals & Resources Co.,

FY2020FY2019(2Q)(Annual)(2Q)

FY2021(Annual Forecasts)

Copper output (t)77,06937,51774,38635,942

72,111

Copper sales volume (t)83,86441,51581,99838,712

79,408<About copper production>
we have been reviewing our consignment ratio at the joint smelter and have been
gradually reducing our copper production from 88,004 tons per year in FY2018.
In FY2023, we are on track to reduce the amount to at least 70,000 tons per year.

【State of Employee (Consolidated)】
End of Mar. 2020
Number of consolidated employee (Persons)

2,755

End of Mar. 2021
2,752

End of Sep. 2021
2,824

vs End of Mar. 2021
72
14

Long-term Performance[Consolidated Financial Results](Unit: Million yen)

FY2007

FY2008FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020213,426

161,857

142,925

165,638

157,566

165,539

163,026

172,544

161,799

149,829

167,695

174,116

165,215

159,702

Operating income

14,407

2,303

1,597

2,821

2,154

3,363

6,886

8,925

7,988

6,545

7,820

8,915

8,693

5,592

Ordinary income

12,940

993

111

1,231

1,268

2,763

6,150

6,603

6,227

7,202

8,105

8,235

8,135

6,773

8,595

-5,917585

563-1,659

2,976

3,976

9,793

5,056

4,254

4,774

4,654

4,431

7,468

FY2007

FY2008FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY202075,841

62,63944,31347,02553,19856,852

71,11175,99072,232

66,80373,45377,58082,691

68,635

Industrial

17,331

15,836

12,783

10,655

12,94912,894

18,527

16,712

14,926

14,041

15,871

17,971

23,237

16,682Rock Drill

37,49729,427

20,38623,88024,14323,305

26,84230,91030,076

26,97930,19930,372

27,66324,149UNIC

21,012

17,375

11,142

12,490

16,10520,651

25,741

28,36727,22925,782

27,381

29,23731,79127,804

112,796

80,17582,12892,203

77,91788,026

90,162

93,27085,64478,96889,98792,722

79,366

88,203

Metals97,51968,786

71,132

79,97968,114

77,94478,68481,51374,192

67,853

77,33480,067

67,14976,094

Electronics

8,751

5,568

5,969

7,147

4,615

4,987

5,381

5,743

5,477

5,816

6,307

6,527

5,506

5,741

Chemicals

6,525

5,820

5,025

5,076

5,187

5,093

6,096

6,013

5,973

5,298

6,344

6,127

6,710

6,367

Real estate

2,758

2,386

2,043

1,577

1,233

1,058

1,013

2,535

3,045

3,074

3,338

2,999

2,386

2,107

Other

1,294

1,204

854

785

766

753

739

747

876

983

916

814

771

755

-

-

3,692

15,04014,874

15,078

-

-

-

-

-

-

-

Net sales

Profi t attri butabl e to owners of parent

Segment Performance[Net Sales]
Machinery

Materials

Paints (*1)
Fuels (*2)

20,735

15,452

9,893

9,004

9,576

3,770

-

-

-

-

-

-

-

213,426

161,857

142,925

165,638

157,566

165,539

163,026

172,544

161,799

149,829

167,695

174,116

165,215

159,702

FY2007

FY2008FY2009FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

6,837

1,733

-3,022

-566

1,970

2,923

5,333

6,551

5,882

3,580

5,083

6,567

7,343

3,968

Industrial

837

767

433

-29

708

778

1,851

1,711

1,037

104

1,005

2,088

3,208

2,113

Rock Drill

3,702

255

-2,584

-350

333

-67

341

1,225

2,217

897

1,782

1,689

142

-1,324

UNIC

2,297

710

-870

-186

928

2,212

3,141

3,614

2,627

2,578

2,295

2,789

3,992

3,180

7,661

229

3,985

3,044

325

324

1,695

1,770

983

1,870

1,648

1,396

776

1,040

Metals

6,206

23

3,224

1,494

308

282

1,503

1,449

1,154

1,738

867

581

301

499

Electronics

984

4

657

1,279

-234

-262

-123

52

-368

17

330

407

-35

161

Chemicals

470

201

104

269

251

304

315

267

197

114

451

406

510

380

Real estate

749

706

1,128

635

356

219

-43

776

1,276

1,265

1,339

1,163

735

736

Other

-228

-304

-376

-92

-93

-63

-60

-130

-72

-126

-196

-147

-94

-82

Paints (*1)

-

-

-19

-93

-329

65

-

-

-

-

-

-

-

Fuels (*2)

-430

202

-29

-56

-13

-28

-

-

-

-

-

-

-

-181

-264

-69

-49

-60

-78

-39

-42

-80

-44

-55

-64

-68

-71

14,407

2,303

1,597

2,821

2,154

3,363

6,886

8,925

7,988

6,545

7,820

8,915

8,693

5,592

Total

[Operating Income]Machinery

Materials

Adjustment
Total*1 Withdrew from the Paints business by transferring shares of Tohpe Corporation in March 2013.
*2 Withdrew from the Fiels business by transferring shares of Furukawa Commerce Co., Ltd. in October 2012.
Notice: By applying "Accounting standards for disclosure of segment information, etc." (FY2012), we replace and display the figure for FY2011.

LME copper price (US$/ton)
JPY rate per US$

7,584

5,864

6,101

8,139

8,485

7,855

7,104

6,554

5,215

5,154

6,444

6,341

5,860

6,879

114

101

93

86

79

83

100

110

120

108

111

111

109

106

15

Intentionally Blank

3. Implemental Measures to Strengthening of the Group’s
Business Structure. [Positioning of FY2021 & FY2022]
We have positioned FY2021and FY2022 as a period to focus on the early recovery of the Group‘s performance by strongly promoting thestrengthening of our business structure. (In particular, strengthening and restructuring of overseas marketing capabilities in the Rock Drill
Machinery segment, fundamental review of the consignment smelting business in the Metals segment, and realization of the future conceptof the FURUKAWA Osaka Building in the Real Estate business.)

Creation "Corporate value"and "Social value"

Vision for 2025
(ideal image for 150th anniversary of foundation)

Become a corporate group that leverages its
reputation for category leadership anduniqueness to deliver growth.
(Established November 6, 2015)

Targetingconsolidated annual
operating income
regularly in excess of¥15 billion

M e d i u m - t e r mBusiness Plan etc.

Phase

Phase 1

Phase 2Phase 3Time period

FY2017-2019

FY2020-2022

FY2023-2025

Positioning

Built foundations
for renewed growth

Expedite growth and further
improve profitability

Complete realization of
Vision for 2025

Designation

Medium-TermBusiness Plan 2019

Medium-TermBusiness Policy 2022

Medium-TermBusiness Plan 2025

We postponed announcement of MediumTerm Business Plan 2022 and instead
decided to formulate/ announce
consolidated performance forecasts foreach single fiscal year.

We will consider disclosing theplan when we announce ourresults for FY2022.

Perfo
rman
ce
indic
ators

OperatingincomeROE

Approx. ¥8.5billion [¥8.6billion]

Approx.6-7% [5.8%]

17

3. Implemental Measures to Strengthening of the Group’s
Business Structure. [Industrial Machinery Segment]- The Industrial Machinery segment is strengthening sales of belt conveyor systems as amethod of transporting earth and sand that reduces environmental impact.
- Clarification of the target
We are strengthening our proposals for long-distance flat belt conveyors and SICON® enclosed hanging
conveyors that improve conveying efficiency while taking the surrounding environment into consideration ofdisaster prevention and mitigation, urban civil engineering, and the private sector.

Ex.1 Flood countermeasures- Review dam functions (Upper reaches of rivers)
the number of dams that require removal of accumulated sediment for recover dam functions is increasing.
If carrying out 250,000 cubic meter per year gravel that constantly flows into the dam, 30-40 dump truck s are required
per hour.
- Build new dams (Upper reaches of rivers)
Transport large amounts of earths, sands, and aggregates over steep terrains.
- Construct control reservoirs (Middle reaches of rivers)
Dump transportation in residential areas has issues of restrain noise and dust,
and ensuring local safety.
- Reinforce levees (Lower reaches of rivers)

Ex.2 Urban civil engineering- Construct deep shield tunnels in urban area and expand airports, etc.
Image of belt conveyors- Strengthening our efforts to collect information from consultants
and general civil engineering contractors.
we are strengthening our efforts to collect information from consultants in various fields (dams,
tunnels, roads, disaster prevention and mitigation) and general civil engineering contractors,
as well as from maritime contractors who are strong in marine engineering.
=>We will increase the number of orders for our differentiated product, the SICON® enclosed
suspended conveyor, by observing actual equipment and cooperating in its design.
Observing actual equipment in Oyama Works17

3. Implemental Measures to Strengthening of the Group’s
Business Structure. [Rock Drill Machinery Segment]- Strengthen and rebuild its overseas marketing capabilities - undergoing reforms to shift its focus from volume to profit We aim to achieve early improvement in profitability through (1) centralized production and sales of mainstay
models, (2) creation of the Southeast Asian crushed stone market, and (3) strengthening of Life Cycle Support.
We have implemented a reorganization on October 1, 2021.

Markets to attack (Via overseas subsidiaries)[North America][Europe]Expand sales of large-sized machines for bothhydraulic crawler drills andhydraulic breakers.

Strengthen sales with a focus on
medium and large hydraulic breakers
and implement measures for dealers.

Hydraulic crawler drills

Hydraulic breakers- Narrow down the models to optimization.
- Concentrate on sales of the HCR1550
which is the main large-size model.

Hydraulic breakers- Reorganize our dealer network in priority countries.
- Collaborate with construction equipment
manufacturers.
Hydraulic crawler drill HCR1550- Sales of the newly introduced large hydraulicbreaker (Fxj770) have been strong.
- Confirming demand for ultra-large machines andconducting market research.

Hydraulic crawler drills- Limit sales regions and models to focus on
profitability.
- Strengthen support for sales in Africa.

Life cycle support

Life Cycle Support- Provide extended warranty and parts set sales forhydraulic breakers.

- Continue and expand the maintenance business.
Ultra-large hydraulic breakerFxj77018

3. Implemental Measures to Strengthening of the Group’s
Business Structure. [Rock Drill Machinery Segment]- Strengthen and rebuild its overseas marketing capabilities - undergoing reforms to shift its focus from volume to profit -Markets to create (Direct trade)

Markets to consolidate and eliminate[Southeast Asia] Create a crushed stone market [Other regions]Introduce attachment drills
Overseas subsidiaries (China, India,
Induce users of pneumatic crawler drills to switch to hydraulic drills.
->Appeal the performance and superiority of FURUKAWA’s
Panama)hydraulic rock drills.

Considering the consolidation and elimination.

Shift our distributor policy
Exclusive distributors -> Multiple distributors by customer segment

FURUKAWA ROCK DRILL(SHANGHAI) CO.,LTD.

Life cycle support
Extended warranties, work to strengthen parts sales through dealer
support.

FURUKAWA ROCK DRILL
INDIA PVT.LTD.

Pneumatic crawler drill

Attachment drill withhydraulic rock drill

FURUKAWA ROCK DRILLLATIN AMERICA S.A

Hydraulic crawler drill

19

3. Implemental Measures to Strengthening of the Group’s
Business Structure. [UNIC Machinery Segment]- Overseas market environment and countermeasures of UNIC products- UNIC cranes (Truck-mounted cranes)
Chinese manufacturers are gaining ground (Southeast Asia, Middle East)=>Chinese manufacturers have a poor reputation for after-sales service, so we will take measures toimprove customer satisfaction by strengthening the technology and service capabilities of ourdealers for customers who value this.

Low-cost Korean and Chinese manufacturers are improving their quality and increasing
their presence in the market=>Develop cranes with equipment that meets customer needs and differentiate ourselves from theconventional simple models that lack various options in order to compete on price.

Increasing the demand of large equipment

Large-sized crane URV1004
Straight crane Demand example by class=>Respond with large equipment manufactured at Taian FURUKAWA
in China.
For Russia, Philippines, Vietnam, Indonesia, etc.

- Mini-crawler cranes
Expanding share among European manufacturers

Indonesia

Vietnam=>develop and sell new models equipped with equipment andoriginality in line with customer requirements.

Shifting product trends (Multi-functional and electric models, etc.)=>Continue to expand the functions of current models to maintain our market share.
Enhance optional equipment, introduce AGM battery models to the market.
AGM battery model mini-crawler crane20

3. Implemental Measures to Strengthening of the Group’s
Business Structure. [Electronics Segment]- Strength of aluminum nitride products and the future direction.

- Aluminum nitride(AlN) is an excellent heat-dissipating insulator.
Demand for heat dissipation components has been expanding due to theincreasing integration, miniaturization, and thinning of electronic devices.
=>High thermal conductivity, insulation, heat uniformity, and corrosion resistance,
has been in increasing demand although it is expensive.

- Our strength is “Sintering technologies”
Molding, sintering, and processing powdered AlN materials is our characteristics.
=>Manufacture components, substrates, and fillers that serve as heatdissipation components.
Our strength lies in our accumulated sintering time and temperature control.

- With our unique technology and know-how, aiming to sell the
products with high thermal conductivity.
With our unique technology and know-how, we are able to manufacture productswith uniform thermal conductivity and insulation, as well as the world's largest-sizedlarge components with less warping, cracking and discoloration during firing.
=>Recognized as an aluminum nitride manufacturer in the fine ceramics industry.
Currently developing high-grade, high thermal conductivity sinter (Components, substrate).
=>Developing high thermal conductivity components with a thermal conductivity of 250 W/m-K,
which surpasses the world's highest thermal conductivity products of 230 W/m-K, andsintered substrate products, aiming to sell them during FY2021.

21

3. Implemental Measures to Strengthening of the Group’s
Business Structure. [Sustainability]- The Furukawa Company Group Basic Policy on Sustainability Initiatives. (Formulated on Dec. 1, 2021)
The Furukawa Company Group has positioned efforts toward sustainability as one of its most important management issues. In addition
to contributing to help realize a sustainable society, the Group is committed to achieving sustainable growth and increasing mid- to-longterm corporate value by establishing a robust corporate foundation for growth and resolving social issues through its business.

1. Defensive sustainability:
Establishing a robust corporate foundation for growth
In order to establish a robust corporate foundation for growth, the Groupwill strengthen and expand its enterprise risk management system
and increase corporate value by emphasizing business practices thatreflect CSR/ESG issues recognized and to be solved by the Group.

2. Aggressive sustainability:
Resolving social issues through businessIn addition to increasing the value of the Furukawa brand through“marketing-based management” that incorporates CSV perspectives,
the Group will create corporate value and contribute to the creation ofsocial value by developing infrastructure and providing products,
technologies, and services that help to resolve social issues.

=>Carry out a reorganization to lay mainly on promotion of
the sustainability. (As of Dec. 1, 2021)- Reorganizing CSR Promotion Meeting and renaming it
Sustainability Promotion Meeting.
- Newly established Risk Management Committee.
- Abolish CSR Promotion Department, and newly establishedSustainability Promotion Department.

Approach to Sustainability (Images)

22Thank you for your understanding and continued support.

24

Cautionary Notes Regarding Forward-Looking Statements
Statements about future predictions contained in this document are based on various factors—including forecasts,
expectations, assumptions, plans, acknowledgments, and evaluations—that derive from information currently athand. Actual business conditions and activities involve various known and unknown risks and uncertainties and canbe affected by them. Accordingly, forward-looking statements and suggestions based thereon may differ
significantly from actual outcomes.
Known and unknown risks and uncertainties than can potentially affect future forecasts are described in the
Company’s Annual Report, Financial Statements and in the Business Risks section of the Company’s corporatewebsite. However, such risks and uncertainties are not limited to those described therein.
Consequently, the Company cannot promise or guarantee the achievement of key performance indicators[ (KPIs)]
or forecasts, nor of future results, as described in this document.
Irrespective of actual results, moreover, the Company is not obligated to update the content of this document after
its release date, and does not have a policy to do so.
The purpose of preparing this document is to help shareholders, other investors, and the like obtain a better
understanding of the Company’s management policies and information, not to solicit any equity investments,
including the purchase or sale of the Company’s shares.
Investors are asked to take responsibility for final investment decisions in light of the aforementioned points.
Please take responsibility when using this document. The Company bears no responsibility for erroneous ordefective information contained in this document, nor of changes in [key performance indicators/KPIs] or forecasts,
nor of any other losses caused as a result of using this document.

6. Appendix“Medium-Term Business Policy 2022”- Expedite growth and further improve profitability. -Disclosed May 25, 2020
*May 25, 2021
corrections Page 4
Addition Page 7-8This document contains forward-looking statements that reflect the Company’s judgments based on various assumptions. The Company
makes no guarantees or promises regarding the certainty, completeness, or implementation status of such statements.

1

“Medium-Term Business Policy 2022” Contents
1. Vision for 2025 ”FURUKAWA Power & Passion 150”
2. Positioning of “Medium-Term Business Policy”
3. Management Policy(1) Company wide strategy(2) Increase the value of the Furukawa brand through “marketing-based
management” that incorporates CSV perspectives(3) Contribution to the SDGs through “marketing-based management”
that incorporates CSV perspectives(4) Increase corporate value by emphasizing business practices that reflect
CSR/ESG issues recognized and to be solved by the Group(5) Basic strategies and priority issues by segment(6) Product development system(7) Strengthen and expand our human resource base(8) Actively promote investments to increase corporate value(9) Establish a robust corporate foundation21. Vision for 2025 ”FURUKAWA Power & Passion 150”
May 8, 2020 partially revised (Under lined)

Vision for 2025 “FURUKAWA Power & Passion 150”
Become a corporate group that leverages its reputation for category leadership and uniqueness to deliver growth.

<Policy for achieving the vision>
Increase the value of the Furukawa brand through “marketing-based management”(*1) that incorporates CSV(*2) perspectives.

Sustainable
expansion of themachinery business

Strengthen andexpand our humanresource base

Actively promote
investments to increase
corporate value

Establish a robust
corporate foundation(*3)

Aiming for FY2025(150 anniversary of foundation)
Targeting consolidated annual operating income regularly in excess of ¥15 billion.
(*1) Marketing-based management incorporating CSV: This means incorporating marketing into the core of management to provide products and services recognized as valuable in changing
markets, as well as to resolve issues and problems faced by customers, with the aims of increasing corporate value and achieving sustained growth. It also reflects the Group’s intention toachieve the Sustainable Development Goals (SDGs) and otherwise resolve various social issues, including such domestic issues as building national resilience and the declining working-age
population, and thus help realize a sustainable society.
(*2) Creating shared value (CSV): This is a management framework that enables companies to co-create social value and corporate value by tackling social,environmental, and other issues.
(*3) At the time of partial revision( May 8, 2020), we will work diligently to “Increase corporate value by emphasizing business practices that reflect CSR/ESG issues recognized and to be solvedby the Group.” which is one of the “Establish a robust corporate foundation”

3

2. Positioning of “Medium-Term Business Policy”
Creation "Corporate value"and "Social value"

Vision for 2025
(ideal image for 150th anniversary of foundation)

Become a corporate group that leverages its
reputation for category leadership anduniqueness to deliver growth.
(Established November 6, 2015)

Targetingconsolidated annual
operating income
regularly in excess of¥15 billion

M e d i u m - t e r mBusiness Plan etc.

Phase

Phase 1

Phase 2Phase 3Time period

FY2017-2019

FY2020-2022

FY2023-2025

Positioning

Built foundations
for renewed growth

Expedite growth and further
improve profitability

Complete realization of
Vision for 2025

Designation

Medium-TermBusiness Plan 2019

Medium-TermBusiness Policy 2022

Medium-TermBusiness Plan 2025

Approx. ¥8.5billion [¥8.6billion*]

We postponed announcement of MediumTerm Business Plan 2022 and instead
decided to formulate/ announce
consolidated performance forecasts foreach single fiscal year.

We will consider disclosing theplan when we announce ourresults for FY2022.

Perfo
rman
ce
indic
ators

OperatingincomeＲＯＥ

Approx.6-7% [5.8%]

4

3. Management Policy(1) Companywide strategy“Expedite growth and further improve profitability.”
Under Medium-Term Business Policy 2022, with the aim of realizing Vision for 2025, we will work toincrease the value of the Furukawa brand by advancing marketing-based management, which has
been redefined to incorporate CSV perspectives. We will also strengthen our ability to find and solve
problems in the field and our ability to produce innovation. Targeting sustained growth, meanwhile, wewill “Strengthen and expand our human resource base,” “Actively promote investments to increase
corporate value,” and “Establish a robust corporate foundation.” Under Medium-Term Business Plan
2019, we built foundations for renewed growth. By making all-out efforts to solidify these foundations,
we will work to “Expedite growth and further improve profitability.”

Sustainably expand the Machinery business, step up alliances and M&As,
emphasizing business practices that reflect CSR/ESG issues recognized.
In particular, we will continue striving to “Sustainably expand the Machinery business”—
positioned as a core business under Medium-Term Business Plan 2019—in order to clearly
identify priority investments and growth businesses. We will also step up alliances andM&As to achieve discontinuous growth. In addition, we will work diligently to “Increase
corporate value by emphasizing business practices that reflect CSR/ESG issues recognized
and to be solved by the Group.”5(2) Increase the value of the Furukawa brand through “marketing-based management” that incorporates CSV perspectives
We will generate corporate value by providing infrastructure, products, technologies, and services that help solve social issues. At the same time,
we will continue striving to create social value building social infrastructure and realizing a safe, environmentally friendly, and prosperous society.

[Value creation process of Furukawa company group]“marketing-based management” that incorporates CSV perspectives:
Marketing-based management incorporating and redefining CSV, this means incorporating marketing into the core of management to provide products and services recognized as valuable inchanging markets, as well as to resolve issues and problems faced by customers, with the aims of increasing corporate value and achieving sustained growth. It also reflects the Group’s
intention to achieve the Sustainable Development Goals (SDGs) and otherwise resolve various social issues, including such domestic issues as building national resilience and the declining
working-age population, and thus help realize a sustainable society.

6（3）Contribution of the SDGs through “marketing-based management” that incorporates CSV perspectives
Of the 17 SDGs, we are focusing particular attention on achieving Goal 11 (“Make cities and human settlements inclusive, safe, resilient and sustainable”)
and Goal9 (“Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation”). We will also strive to create social
value by building social infrastructure as stated in “The Furukawa Company Group’s Value Creation Process” (please see pages 2–3), while realizing a safe,
environmentally friendly, and prosperous society.

SDGs with High Contribution Levels (◎: Especially Important; 〇: Important)Segment

Main Products, Technologies,
and Services○

Industrial
Pumps

Belt conveyors

◎

◎

◎

○

◎

◎

○

◎

◎

◎

◎

◎

◎

◎

◎

○

◎

Steel bridges and steel
structures

Rock Drill○

Tunnel drill jumbos Hydraulic crawler Hydraulic crushers
drillsUNIC
UNIC cranes

Mini crawler
cranes◎

Ocean cranes○

MetalsElectrolytic copper○

Electronics
High-purity
metallic arsenic

Coils

Sulfuric acid

Aluminumsulphate

Optical components(lenses)○

Chemicals○◎

Ferrous sulfate

7

（4）Increase corporate value by emphasizing business practices that reflect CSR/ESG issues recognized andto be solved by the GroupOne policy as part of our Vision for 2025 states our commitment to “increase corporate value by emphasizing practices that reflect CSR and ESG issues recognized andto be solved by the Group” as a core foundation of management. We also clarified the relationship between ESG, CSR priority issues and relevant major SDGs.

ESG Section

E(Environmental)

CSR/ESG Priority Issues

Major Related SDGs

Promote environmental
protection activities

Offer products and services that satisfy
customers

S（Society）

Build fair and impartial business
relationships and relationships ofreciprocal trust with business partners
Promote social contribution activities
Realize comfortable working environments for
employees and give them fair evaluationand treatment
Build a meticulous group governance system

G（Governance）

Communicate with shareholders andother investors
Strengthen compliance8（5）Basic strategies and priority issues by segment: Industrial Machinery
Basic strategy

We will continue our strategy of “Increasing our involvement in section plant construction projects and expanding our contractor business,
including large-scale projects for both the public and private sectors, in order to transition from a standalone machinery manufacturer,
strengthen our engineering capabilities, and enhance our business foundation in the domestic market,” and thus establish a solid
growth trajectory.
Priority issues- Attract new orders by providing technical proposals for section plant construction projects and other projects.
- Cultivate demand for SICON® enclosed hanging conveyors.
- Strengthen earnings foundation by capturing replacement demand for pumps and material machinery.

GEOPUS C3 cone crusher

High efficiency energy saving
slurry pump
SPL e-Performance

SICON® Enclosed Hanging Conveyor designed for the Sakaigawa–Kanamori retention basin project (Machida City, Tokyo)

Belt Conveyors designed for the Tokyo Outer Ring Road project

SICON® is a registered trademark of ContiTech Transportbandsysteme GmbH.

9

（5）Basic strategies and priority issues by segment: Rock Drill Machinery
Basic strategy

Strengthen our Life Cycle Support (LCS) capabilities, reinforce our earnings foundation for drill products(blast hole drills and drill jumbos), tap new markets, and launch new products to increase profits.
Priority issues- Strengthen and rebuild overseas marketing capabilities.
Reinforce overseas business foundation for blast hole drills.
Create overseas business foundation for drill jumbos.

- Build business models using Life Cycle Support (LCS).
Strengthen stock business by providing various services that benefit customers’ businesses (extended warranty, full maintenance,
proposals for using ICT-based operation support systems to enhance work efficiency, etc.).

- Further enhance lineup of products that contribute to safety and efficiency at tunnel excavation sites, such as fully
automatic drill jumbos and automatic rock bolters.

Customer

Operation support systems

F-MICAS

FRD-NetDistributors &Service stores
Hydraulic Crawler Drill in operation at overseas quarry site

LCS

Furukawa
Drill Jumbo in operation at overseas tunnel excavation site10

（5）Basic strategies and priority issues by segment: UNIC Machinery
Basic strategy

Secure stable income from domestic sales and expand income from overseas sales, by promoting
advanced functions and higher added value in order to strengthen our competitiveness; advancing thestock business; and reinforcing our overseas product, sales, service, and technological capabilities.
Priority issues- Reap benefits from capital investment in Sakura Works and promote further automation.
- Strengthen competitiveness by increasing functionality and higher added value of UNIC cranes, mini crawler
cranes, and UNIC carriers; develop new functions and options meet diversifying applications.
- Expand overseas sales network and enhance sales capabilities of dealers.
- Reinforce our service system.

UNIC products active overseas

Sakura Works

11

（5）Basic strategies and priority issues by segment: Materials, Real Estate
Chemicals

MetalsBasic strategy

Basic strategy
Conduct drastic review of contracted smelting and refining business.

Expand income from existing products and start commercializing and fostering newly developed
products

Priority issues

Priority issues
Identify profitability and future potential of contracted copper smelting business.

- Existing products
Sulfuric acid: Strengthen differentiation by emphasizing high-quality sulfuric acid products- Newly developed products
Metallic copper powder: Enhance product quality, establish mass production and sales
systems, and expand sales channels by providing product samples

Metallic copper powder
Purpose/ Conductive paste

Electrolytic copper

Real EstateElectronics
Basic strategy

Basic strategy

Promote growth of strategic products and launch new strategic products.

Secure stable income from Muromachi Furukawa Mitsui Building and effectively
utilize Furukawa Osaka Building and other real estate owned by the Group.

Priority issues- Aluminum nitride: Utilize high-value-added firing technology to expand
business; develop products with high levels of thermal conductivity andtoughness.
- Diffractive optical elements (DOEs): Utilize microfabrication technology toincrease applications to sensors (in addition to laser processing) in order toexpand sales channels.
- Hybrid coils: Provide product samples in order to emphasize high design
flexibility.
Aluminum nitride
Purpose/ components for semiconductor
manufacturing equipment(such as heater) andsubstrate materials

Priority issues
Decide future plans for Furukawa Osaka Building.

Muromachi Furukawa Mitsui Building(commercial name: COREDO Muromachi 2)
Nihonbashi Muromachi, Chuo-ku

12

（6）Product development system
Basic strategy

Turn development themes into products and businesses that directly contribute to Group operating companies; activate
capabilities to find and solve problems in the field in order to improve productivity, which is essential for manufacturers.
Priority issues- Commercialize products under development, such as fully automatic drill jumbos.
- Promote development of solid electrolyte materials and mass production technology for all-solid-state batteries.
- Strengthen training of engineers to lead the next generation through full-scale deployment of engineer development program.
- Reduce environmental impact during mechanical system product development: Convert power load reduction (achieved throughweight reduction and efficiency improvement) into CO2 reduction equivalent; set reduction targets for each main product; follow
up using PDCA cycle.

（7）Strengthen and expand our human resource base
Basic strategy

Build a motivating company that encourages individual employees to maximize their abilities and create new value.
Priority issues- Develop human resources.
Undertake drastic review of education system.
- Promote Health and Productivity Management.
Reduce total working hours per year, promote diverse workstyles, and improve health examination/re-examination rates.
- Promote diversity.
Promote employment of female planning staff and people with disabilities, and actively hire foreign employees.
- Improve working environments.
Review and maintain working environments that can address emergencies; strongly promote operational reforms.

13

（8）Actively promote investments to increase corporate value
1

Capital investment plan*10 to support stronger manufacturing capabilities

We will make capital investments mainly in the Machinery business (positioned as our core business)
In the Rock Drill Machinery segment, we started a capital investment plan aimed at increasing the production capacity of the Takasaki Works and otherfacilities. We decided to postpone and reassess capital investment from the second stage in light of this segment’s business performance and other factors.

2

Alliances and M&A

We will consider and enter alliances and M&A with peripheral companies that fill the gaps and create continuity in our
existing Machinery business, as well as with companies engaged in the fourth pillar of our Machinery business.
Industrial
Machinery

Rock Drill

Manufacturing and sales ofpumps, material machines(crushers, etc.), environmental
preservation equipment, steel
bridges, belt conveyers andheat-resistant/wear-resistantcastings
Related contract works

Manufacturing and salesof Hydraulic breakers,
Hydraulic crushers,
Hydraulic crawler drills,
tunnel drill jumbos,
mining drill jumbos, etc.

UNIC

Manufacturing and salesof UNIC cranes, Mini
crawler cranes, Ocean
cranes, UNIC carriers,
etc.

Alliances andM&A

Machinery Business

Capital investments mainlyin the Machinery business

Consider and enter
14

経営基盤の整備：（9）Establish a robustROE向上に向けた取り組みの強化・浸透
corporate foundation: Strengthen efforts to increase ROE
We will make individual investment decisions while paying attention to profitability and taking into account risks andcapital costs associated with each investment. We will also step up efforts to improve efficiency and profitability.
At the same time, we will pursue overall optimization of business resource allocations and improve corporate value by
incorporating cost of capital in our business portfolio management.

15

経営基盤の整備：（9）Establish a robustROE向上に向けた取り組みの強化・浸透
corporate foundation: Strengthen efforts to increase ROE

ROEProfitability

Efficiency

Leverage

Net income margin

Total asset turnover

Financial leverage

Profitability
improvement

Efficiency
improvement16

経営基盤の整備：（9）Establish a robust corporateROE向上に向けた取り組みの強化・浸透
foundation: Capital strategies: Pursue optimal capital structure based on rating strategy
Allocation of operating cash flows
We will “actively promote investments that that contribute to increased corporate value” while aiming to establish a robust
financial foundation. At the same time, we will endeavor to make optimal allocations of cash flows in consideration ofshareholder returns.

Dividends
Our policy is to return profits to shareholders in the form of dividends appropriated from retained earnings. Specific dividend amounts are basedon consolidated profits/losses. With the exception of special profit/loss circumstances, we endeavor in principle to pay annual cash dividends of¥50.00 per share with a consolidated payout ratio of 30% or higher. In this way, we strive for stable, continuous shareholder returns.

Treasury stock purchase and cancellation
With respect to purchase and cancellation of treasury stock, our policy is to properly consider all relevant factors, including
share price movements, capital efficiency, and cash flows.

*Rating strategy:
By FY2025 (ending March 2026), the final year of Vision for 2025, we aspire toachieve a financial soundness vision that will enable us to obtain a credit rating of
BBB+ (or higher), which is one notch above the current rating issued 9 by aJapanese rating agency. To this end, we will continue striving to improve ourfinancial soundness.
(*) Debt-to-equity ratio: Interest-bearing liabilities (fiscal year-end) / Shareholders’ equity (fiscal year-end)(*) Interest-bearing debt/EBITDA ratio: Interest-bearing debt (fiscal year-end) / [Operating income + Depreciation

Financial Soundness VisionDebt-to-equity ratio*

0.6–0.7 times (range)

Interest-bearing
debt/EBITDA ratio*

4 times (range)

Issuer rating

BBB+ or higher(Japanese rating agency)（9）Establish a robust corporate foundation: Increase corporate value by emphasizing businesspractices that reflect CSR/ESG issues recognized and to be solved by the GroupWe will formulate medium-term CSR targets (FY2020 to 2022) and develop a PDCA cycle of planning, execution, evaluation and improvement.

17Intentionally Blank